By Danilo Masoni and Kit Rees
MILAN (Reuters) - UK blue chips rose to a one-week high on Thursday after the Bank of England kept rates on hold, lifting export oriented stocks and boosting a market buoyed by solid earnings updates.
The FTSE (FTSE) rose 0.7 percent to 7,460.5 points with big international firms like Diageo (L:DGE) extending gains as sterling weakened following the central bank's decision. The domestically focussed midcap index (FTMC) added 0.2 percent.
The BoE kept borrowing costs at a record low once again and trimmed its forecasts for economic growth both this year and next. It hinted again at a rate hike next year.
"It seems the bank is reluctant to rock the economic recovery by hiking rates just yet and the Bank's view on growth has also been downgraded since the May meeting," said Tom Stevenson, investment director at Fidelity International.
British blue chips suffered in June when the BoE's vote by a narrow 5-3 margin to keep rates on hold boosted bets that a rate hike was closer.On Thursday a six to two majority voted to keep interest rates steady.
On the earnings front, retailer Next (L:NXT) was in the spotlight. Its shares surged 8.8 percent after it returned to sales growth in the second quarter, helped by warm weather and an improvement in its online offering.
"There have been concerns about the instore sales and are Next going to be able to shift towards consumer patterns -- (we're) starting to see more of an online presence as well in the Directory," said Jonathan Roy, advisory investment manager at Charles Hanover Investments.
"The reaction we're seeing today is more of a sigh of relief from investors because Next have consistently disappointed the market with results over the last couple of years."
Precious metals miner Randgold Resources (L:RRS) also enjoyed gains, with its shares rising 4 percent after reporting a jump in first half profit and raising its production forecast.
Shire (L:SHP) rose 4.4 percent after the drugmaker upgraded its earnings forecast and said it was exploring options for its hyperactive drugs business, including a listing.
But disappointing earnings weighed on shares in Convatec (L:CTEC), which slumped 6.5 percent after posting a lower profit for the first half and also announcing the departure of its CEO.
Standard Chartered (L:STAN), down 0.8 percent, extended losses from the previous session after its results were overshadowed by the absence of a dividend.
On the FTSE 250 (FTMC), beaten-down defence stock Cobham (L:COB) leading the charge, up 5.1 percent after its first half results showed the tentative signs of recovery.